Watchdog slams China over lack of transparency

‘OPAQUE’:Transparency International found the survey especially worrying given Chinese firms’ growing world influence, with 60% not reporting political donations

Reuters, BERLIN

The anti-corruption watchdog Transparency International has admonished Chinese companies for their opaque business practices, while praising Indian firms’ relatively high standards, in a survey of emerging market multinationals released yesterday.

China got the lowest rating of the BRICS economies (Brazil, Russia, India, China and South Africa), whose companies made up three-quarters of the total sample in the survey of 100 of the fastest-growing multinationals in 16 emerging economies.

Marked on how transparently they present measures to combat corruption, how they report on their organizations and how they disclose data like revenue, expenditure and taxes, three-quarters of the companies scored less than five out of 10.

“As emerging market companies expand their influence they should seize the opportunity to play a bigger role stopping corruption internationally,” the Berlin-based independent pressure group head Huguette Labelle said.

Widespread shortcomings included the failure of about 60 percent of all the companies surveyed to disclose information about their political contributions.

“Results show that companies from China lag behind in every dimension with an overall score of 20 percent,” Transparency said in the report. “Considering their growing influence in markets around the world, this poor performance is of concern.”

Eight of the 10 worst performing companies were Chinese, such as state-owned Chery Automobile Co, which along with Mexico’s privately owned consumer goods group Mabe scored zero points.

Chery spokesman Wang Wei said that he had never heard of Transparency International and was never contacted by the organization.

“Chery is not publicly traded, so naturally it is not as transparent as those listed companies,” Wang said, adding that the automaker does publish quarterly and annual results to its bond investors.

Pablo Moreno, Mabe’s corporate affairs director, said the report did not fairly reflect the company’s control and transparency mechanisms because it was based on information available on company Web sites. As a private company, Mabe is not obliged to publicly reveal information related to its business activities, but complies with strict ethics and accountability codes, he added.

Transparency said Indian firms performed best among the BRICS with a result of 54 percent and several occupy the top positions in the overall index, attributing this to laws in India about how multinationals must report on subsidiaries.

Top of the class overall came India’s Tata Communications Ltd, which also topped the anti-corruption programs category with 92 percent, followed by three more Tata companies.

A Tata Communications representative was not immediately able to comment.

Transparency International said public disclosure of anti-bribery measures “confirms a company’s commitment to ethical conduct” and made it easier for the public to monitor them.

Emirates Airline, which is state-owned, came first in the category for organizational transparency, followed by Johnson Electric Holdings Ltd of China and Malaysian state energy company Petronas.

Emirates, Johnson Electric and Petronas were not immediately available to comment.

This category marked firms on their disclosure of data like majority and minority holdings, percentages owned by the parent company and the country of incorporation and operation — all of which is often made “deliberately opaque for the purpose of hiding the proceeds of corruption,” Transparency said.